Oil markets retreated from multi-year lows but still fell more than 2% after Saudi Arabia cut export prices to the US.

The price of Brent for next-month delivery settled down .96 at .82 after touching its lowest point since October 2010. (Reuters)

Oil markets retreated from multi-year lows on Tuesday but still fell more than 2 percent after Saudi Arabia cut export prices to the United States threatening to deepen a global supply glut that has driven prices down 30 percent since June.

U.S. crude futures settled down $1.59 at $77.19 after reaching the lowest intraday price since October 2011 in the morning.

The price of Brent for next-month delivery settled down $1.96 at $82.82 after touching its lowest point since October 2010.

Refined product stocks jumped last week, surprising those analysts who expected declines, according to data from the American Petroleum Institute released on Tuesday after oil prices settled. Distillate fuels stockpiles rose by 155,000 barrels instead of the 1.8-million-barrel drop predicted in a Reuters poll of analysts. Gasoline stocks rose by 240,000 barrels despite an expected 400,000 barrel increase.

U.S. crude stocks fell 639,000 barrels last week to 374.9 million in the wake of the revved-up refinery output.

On Monday, Saudi Arabia surprised the market by raising prices for Asia and Europe but cutting prices for U.S. customers. Oil slid as much as $2 a barrel in late trade, and the sell-off continued Tuesday, triggering technical sell-stops.

“The Saudis have basically declared war on the U.S. oil producers,” said Phil Flynn at Price Futures Group. “I think they believe that the only way they’re going to survive in the long term is to break the market in the short term.”

On Monday, longer-dated oil futures became more expensive than near-term contracts, putting charts into a contango structure for the first time since Jan. 17. The futures curve left contango in the afternoon, and the spread between December and January contracts stood at 2 cents at 4:48 p.m. EST (2148 GMT).

NO OPEC CONSENSUS

The Organization of the Petroleum Exporting Countries (OPEC) meets Nov. 27, but there are no clear signs whether it will curb output.

The United Arab Emirates oil minister said the country is “not panicking”. Venezuela and Ecuador have said they are working on a joint proposal to defend oil prices.

“I can see OPEC and Saudi Arabia playing the long game. A low price for a period of time may actually play into the hands of people with a lot of reserves in the ground at cheap cost,” Pierre Lorinet, chief financial officer of Trafigura, said at the Reuters Global Commodities Summit.

Saudi Oil Minister Ali al-Naimi has not commented publicly on the oil market since September. On Wednesday, he will meet Venezuela’s foreign minister Rafael Ramirez, also the head of its OPEC delegation, according to a person close to the Saudi delegation.